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Russia: X5 retailer to open chain of 45-50 hard discount stores in 2021

Russian Market leading grocery retailer X5 Retail Group (listed on the Moscow CX and London SE: FIVE) plans to open a Russian chain of hard discount stores under the Chizik brand name (meaning 'bird'), targeting to open 45-50 stores in 2021, the X5 Group’s Strategy Director Vladimir Salakhutdinov said. He was speaking at the Investor’s Day event.

"Hard discount stores are stores with prices, which are lower than in conventional stores, with small sales area (creating high m2 turnovers) with minimum staff and minimum mostly own private label branded assortment covering the most common shopper needs.' The first store opend this week on Dolgoprudnaya Street in Moscow. Although we will open only a few pilot stores this year, we plan to develop the chain up to 45-50 stores next year," Salakhutdinov said. According to him, the store assortment will not exceed 800 unique SKUs. In the future, about 60% of the Chizhik assortment will be goods of its own private label brands, RBC reports. As Salakhutdinov noted, the quality of private labels will be at the level of the corresponding categories of other A-brands, but the cost will be 15% lower.

"This will not be the case at the start, but in the future we will reach these figures.

X5 plans to develop Chizhik to the scale of a federal retail network comparable in number of stores to Pyaterochka and Perekrestok, the company said. The stores are all small stores of 200-250 square meters," Salakhutdinov added.

X5 Retail Group N.V. operates several retail formats: the chain of proximity soft discount stores under the Pyaterochka brand, a supermarket chain under the Perekrestok brand and the hypermarket chain under the Karusel brand. As of 30 September 2019, X5 had 15,752 company-operated stores. The company added 492 net new stores in Q3 2019.

“Why Chizhik? We thought about how our new store should be, what our new brand should be. It is very important, because we make it for our customers, it should be friendly, positive and positive emotions forming. Chizhik is a fast and very friendly bird. And also "siskin" is an acronym for the words "black" and "yellow", and these are precisely the colors of the store format that we want to present," Salakhutdinov explained the name of the new chain.

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